Seventy-eight-year-old Pauline has $500,000 in her IRA. She’s required by law to take out $24,600 this year, but she doesn’t need that much and she’s dreading the thought of paying the tax. Pauline is a big supporter of Children’s Friend and has been thinking of making a substantial gift for some time. Pauline has a great idea to make that gift, meet her minimum distribution for the year, and save herself from some of the tax liability.
Pauline directs the administrator of her IRA to $20,000 to Children’s Friend, and $5,000 to herself. The $20,000 gift to Children’s Friend counts toward her required annual distribution, and she doesn’t have to pay taxes on the gift.*
*QDCs are not eligible for a charitable tax deduction. Please consult your tax advisor for more information about how you can personally benefit from QDCs.